Retirement a distant dream for many Canadians

[Dion]

In conversation: David Chilton

On the illusion of wealth, and why so many are so far behind in saving for retirement

Q: What really struck me about The Wealthy Barber Returns is the focus you put not just on saving more, like in the first book, but on spending less—this idea of living within your means. But that doesn’t seem like the sort of thing that’s going to be popular with people. Most personal finance books tend to come at it from the perspective of telling you how to get what you want.

A: That’s exactly what I’m trying to do. I’m telling people to manage their expectations and get more realistic ones. There’s a line in the book, which, at the time, didn’t seem all that important, but is really an important part of what I’m trying to say. And that’s that we’re not bad savers, it’s that we’re fantastic spenders. And until we get the spending under control, the saving will never take place. So what I tried to do is look at why we spend so much and then talk about the savings part. But you’re right, I do focus more on the spending part than most writers. And that’s the part of the book that’s so far going over the best. That’s resonating with people because they see themselves in a lot of those stories, making the same mistakes. Most people agree that this drive toward consumption and possessing as much as we possibly can is not translating into better happiness levels. In fact, it may be doing the opposite by creating tremendous stress about people’s futures, financially.

http://www2.macleans.ca/2011/09/07/o...or-retirement/

[SeeGeeWhy]

Originally Posted by Reaper

Made me laugh.

Looks like the future will be pretty lean for me! haha

[jtfrogger]

Originally Posted by bizaro86

If you define living as "not dying" that's possible. In Calgary half of that is rent, (or property tax/utilities/insurance are close if you own a place). Even counting the borderline free senior transit passes as transportation, that doesn't leave much for anything other than food and basic necessities.

But I wouldn't call that the golden years by any stretch.

That is the point of the article. It shows the scenario of just scraping buy and then goes on to show that you do not need any retirement savings to just scrape by. Not great living, but you are not eating cat food. Anyone that would actually read the article is probably shooting for higher. (If you are going to a financial website to read on retirement incomes, you are probably saving something.)

Having $250k-750k in retirement saving gives someone enough for a very comfortable middle-class lifestyle. Where you are in that range is the difference in the frequency and luxuriousness of your vacations, how often you eat out, what you do for entertainment, etc. A good portion of this could very well be your home.

[Erick Estrada]

Originally Posted by IliketoPuck

Well EE, its tough to find a Baby Boomer that won't help themselves to a piece of the CPP pie when it is their turn.

At least the kids working four hours a day aren't leveraging themselves into debt they can't afford in order to live above their means.

Kids working those jobs only care about enough money for beer and insurance on their '98 Cavalier.

What are you talking about? Half of them don't want to work period and are happy living with their parents and surfing the internet all day into their 20's. The baby boomers have messed a lot of thing up but Generation Y is the slacker generation. What's really contradictory to your theory is that the first thing a Gen Y does when he get's his first good job is buy a BMW before the house. At least the Baby Boomers had a little sense.

[MarchHare]

Originally Posted by Erick Estrada

What are you talking about? Half of them don't want to work period and are happy living with their parents and surfing the internet all day into their 20's. The baby boomers have messed a lot of thing up but Generation Y is the slacker generation. What's really contradictory to your theory is that the first thing a Gen Y does when he get's his first good job is buy a BMW before the house. At least the Baby Boomers had a little sense.

Wait, I thought Gen X is the slacker generation. Or does that title just automatically shift to whichever generation is currently the youngest one in the workforce? "Damn kids these days, when I was their age..."

[Dion]

Originally Posted by Erick Estrada

What are you talking about? Half of them don't want to work period and are happy living with their parents and surfing the internet all day into their 20's. The baby boomers have messed a lot of thing up but Generation Y is the slacker generation. What's really contradictory to your theory is that the first thing a Gen Y does when he get's his first good job is buy a BMW before the house. At least the Baby Boomers had a little sense.

I think that's a load of bull. With todays economic conditions many are struggling to find a job and earn enough money to live on thier own.

'Boomerang kids' forced to return home as adults:

High unemployment and changing social norms are guiding young - and not-so-young - adults to move back home, new census data shows.

"It's almost becoming a normal step," said Joshua Coleman, a San Francisco Bay area psychologist who is a co-chairman of the Council on Contemporary Families. "Children leave home and go away to college - or don't - and then move back in with the parents for a while."

http://www.vancouversun.com/life/Boo...542/story.html

[Erick Estrada]

Originally Posted by MarchHare

Wait, I thought Gen X is the slacker generation. Or does that title just automatically shift to whichever generation is currently the youngest one in the workforce? "Damn kids these days, when I was their age..."

I'm generation X (depending on your definition of when it began and ended) and I busted my ass for years as did most of the kids I grew up with. I'm not that far from Gen Y and I can totally see the differences for sure and it's nothing to do with the typical old person saying; "when I was young" because I'm not that old.

[yads]

Originally Posted by bizaro86

If you define living as "not dying" that's possible. In Calgary half of that is rent, (or property tax/utilities/insurance are close if you own a place). Even counting the borderline free senior transit passes as transportation, that doesn't leave much for anything other than food and basic necessities.

But I wouldn't call that the golden years by any stretch.

My grandparents get by on OAS plus their very (and I mean very) modest pension from Russia. Sure they don't live extravagantly, but that 22K-27K quoted in the article is enough to have a modest lifestyle, but is hardly eating cat food. With an extra 33K/year you can do a lot. Add the fact that if you retire at 65 you likely only have 10-15 years before you really slow down. I mean are you really planning to be golfing everyday by the time you're 80?

I take issue with statements like you need 135% of your current income to retire, which is patently false and is not backed up by reality.

[Erick Estrada]

Originally Posted by Dion

I think that's a load of bull. With todays economic conditions many are struggling to find a job and earn enough money to live on thier own.

'Boomerang kids' forced to return home as adults:



http://www.vancouversun.com/life/Boo...542/story.html

You just proved my statment earlier. When you buy the BMW before the house you end up living with mom and pop.

[Dion]

Originally Posted by Erick Estrada

You just proved my statment earlier. When you buy the BMW before the house you end up living with mom and pop.

Did you read the part about high unemployment in the article?

[tripin_billie]

Originally Posted by Erick Estrada

What are you talking about? Half of them don't want to work period and are happy living with their parents and surfing the internet all day into their 20's. The baby boomers have messed a lot of thing up but Generation Y is the slacker generation. What's really contradictory to your theory is that the first thing a Gen Y does when he get's his first good job is buy a BMW before the house. At least the Baby Boomers had a little sense.

No actually, the first thing we do is pay off our massive student loan debt as getting quality work, in some cities, now requires a Masters or professional degree (DC metro area, over 25% of population has at least a Masters).

Tuition growth, against inflation, is insane.

Also, no one wants to sit at home like a chump on the couch, but finding quality work can be a challenge.

Also, to tell me I'm lazy, even though I have worked since I was 14 is massive overspecialization.

Want me to overgeneralize about Xers? They're idiots. They didn't get the memo that they should have when they saw their parents getting laid off late in careers. They want to "fight the man" too much and don't realize that sometimes, selling out a bit can be useful for a few years.


Special note, I still drive an 98 Corolla that is falling apart, but since I have no car payment, I'm keeping it until it dies completely.

[Erick Estrada]

Originally Posted by tripin_billie

No actually, the first thing we do is pay off our massive student loan debt as getting quality work, in some cities, now requires a Masters or professional degree (DC metro area, over 25% of population has at least a Masters).

Tuition growth, against inflation, is insane.

Also, no one wants to sit at home like a chump on the couch, but finding quality work can be a challenge.

Also, to tell me I'm lazy, even though I have worked since I was 14 is massive overspecialization.

Want me to overgeneralize about Xers? They're idiots. They didn't get the memo that they should have when they saw their parents getting laid off late in careers. They want to "fight the man" too much and don't realize that sometimes, selling out a bit can be useful for a few years.


Special note, I still drive an 98 Corolla that is falling apart, but since I have no car payment, I'm keeping it until it dies completely.

Quality work requires a masters? The trades are quality work but none of you want to work a job that requires getting off a desk chair. Repaying large student loans is something only Gen Y had to deal with? See what I mean. You guys don't have a grip on reality.

[IliketoPuck]

Here's my take EE, and I was being partially faceitious in my first post.

Yes things have changed, and kids are tending to live with their parents for longer periods of time. Some of it definitely has to do with a lack of motivation, but there are other factors to consider as well.

When my parents were young professionals (approximately my age), and had just recently married, they were able to buy a house in Hawkwood for ~$250k. They are both engineers, and were working in O&G, so their salaries would have been (and i'm guessing here) about 50-60k a year.

Fast forward to today. To buy the same house they have in Hawkwood would cost me over $650k, an increase in house prices of more 2.5x!! Have wages kept up with that increase in the cost of living? Not even close. I make more than they did, but my first house will be no where near what theirs was. I do not live an extravagant lifestyle either; my wife and I have one car, I bike to work and rarely go out for dinner or the pub. I save 30% of my paycheque and make regular contributions to my TFSA and RRSP.

The threshold required to be able to effectively move out from under your parents has increased drastically over the years, and I completely understand why some people choose to live at home into their mid twenties in order to be able to afford their first home.

I am not defending people who choose poor spending habits and exorbitant lifestyles while living off of their parents, only saying that it can be difficult to make that first purchase given the availability of high paying jobs and current house prices/economic conditions.

I understand that GenY just doesn't work as "hard" as you do. But I also think a lot of it has to do with whatever generation is youngest being looked down upon by the "hard working" omniprescient infallible previous generation that went straight from highschool to being highly contributing member of society, without making any mistakes along the way either....kids will be kids.

Anyways, all I'm saying is it isn't as easy as it was 25 years ago.

[Erick Estrada]

Originally Posted by Dion

Did you read the part about high unemployment in the article?

I see. So high unemployment is something only Gen Y had to deal with.

[MarchHare]

Originally Posted by Erick Estrada

I'm generation X (depending on your definition of when it began and ended) and I busted my ass for years as did most of the kids I grew up with. I'm not that far from Gen Y and I can totally see the differences for sure and it's nothing to do with the typical old person saying; "when I was young" because I'm not that old.

Are you not even aware of the defining characteristic of your own generation? For years Gen X was called "the slacker generation". The same complaints you now have about Gen Y were heaped upon Gen X just a few years ago.

Ask most people what comes to mind when they hear the phrase “Generation X,” and you’ll hear one word over and over again: slackers. The “slacker” label has clung to the cohort since the early 1990s, when films like Reality Bites (1994), Clerks (1994), and, yes, Slacker (1991) depicted American youth as cynical, directionless, and apathetic.

[Dion]

Originally Posted by Erick Estrada

I see. So high unemployment is something only Gen Y had to deal with.

How do you buy that BMW you were talking about

[IliketoPuck]

Originally Posted by Erick Estrada

Quality work requires a masters? The trades are quality work but none of you want to work a job that requires getting off a desk chair. Repaying large student loans is something only Gen Y had to deal with? See what I mean. You guys don't have a grip on reality.

I did not go to University for 4 years to work in a lumber yard. Like it or not the reality of working in the current professional world is that you need additional designations in order to have any type of upward mobility. And if I am paying significant $$ for that designation, in addition to working a full time job and studying 30 hours a week, yea I guess I won't just settle for working any ol' labour job.

[Erick Estrada]

Originally Posted by MarchHare

Are you not even aware of the defining characteristic of your own generation? For years Gen X was called "the slacker generation". The same complaints you now have about Gen Y were heaped upon Gen X just a few years ago.

Generation X isn't clearly defined as it can mean the 70's as well but that's a different argument. Hey I'm open minded. I've worked with a tonne of slackers from all generations over the years but what I see in kids now I've never seen before.

[Dentoman]

Originally Posted by IliketoPuck

Well EE, its tough to find a Baby Boomer that won't help themselves to a piece of the CPP pie when it is their turn.

Why wouldn't I take my CPP .... I paid into it. Being self-employed, I actually pay double. OAS I will not get.

Originally Posted by Erick Estrada

Quality work requires a masters? The trades are quality work but none of you want to work a job that requires getting off a desk chair. Repaying large student loans is something only Gen Y had to deal with? See what I mean. You guys don't have a grip on reality.

If you don't have a job and can't make ends meet, you take any job you can. This whole "I'm overqualified for that job" schtick is a load of crap.

[Dentoman]

Originally Posted by Erick Estrada

I've worked with a tonne of slackers from all generations over the years but what I see in kids now I've never seen before.

This I wholeheartedly agree with .... and it includes my own relatives. The work ethic just doesn't seem to be there, of course there are exceptions, but I don't see too many. And it extends to all areas of the workforce.